1 February 2011

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The SKF Group

Tom Johnstone, President and CEO

1 February 2011

1 February 2011

2Key points, Q4 report

• Strong performance Operating profit: SEK 2,202 m (1,004). Operating margin: 14.3% (7.2)Profit before tax: SEK 2,048 m (765)Cash flow: SEK -5,966 m (1,445), Cash flow excl. acquisition of Lincoln Industrial SEK 798 m

• Strong organic sales development in local currency:SKF Group: +17.2%All divisions and regions showed very good growth

• Completed acquisition of Lincoln Industrial

Outlook for Q1 for SKF Group• Demand

Significantly higher compared to Q1 2010Slightly higher sequentially compared to Q4 2010, adjusted for normal seasonality

• Manufacturing levelSignificantly higher year over yearSlightly higher compared to Q4 2010, adjusted for normal seasonality

1 February 2011

3Acquisition of Lincoln Industrial, Q4 2010

• A leading supplier of lubrication systems and tools

• Headquarter in St. Louis, Missouri, USA

• Sales of around USD 400 m in 2010

• About 2,000 employees

• Total purchase price net: around SEK 6.8 bn

• Financing: around SEK 3.2 bn cash (net) and SEK 3.6 bn debt

1 February 2011

4New facilities opened in 2010

Tver, Russia Ahmedabad, IndiaHaridwar, India

3factories

1Global Technical

Centre in Shanghai

9 Solution Factories - in total 17

1 February 2011

5Examples of new product launches in 2010

SKF Commutation Sensor-Bearing Unit

Four-row tapered roller bearing

SKF MetroCon –

CBM for elevators and escalators

Low friction X-Tracker

SKF Cam Follower Unit

SKF SPEEDI-SLEEVE

SKF One Way Clutch

SKF Crane Asset Management

SKF Hydraulic driven lubricator

SKF Engineering Simulation

Services

SKF solutions for special pumps

SKF Overrunning Alternator

Pulley Unit

SKF Drum Support Unit

SKF Low Friction Engine

Seal

High performance seal

2010: 251 first filings of patent applications

1 February 2011

6Six Sigma

2010 status:• 463 Black Belts

• 2,059 Green Belts

• 1,155 projects closed

Hard savings2005: SEK 150 m 2006: SEK 200 m2007: SEK 302 m2008: SEK 462 m2009: SEK 430 m2010: SEK 468 m

4 dimensions:”Standard” Six Sigma, Design for SixSigma, Lean Six Sigma and Six Sigma for Growth

1 February 2011

7Sales volume

-35-30-25-20-15-10-505

101520

% change y-o-y

2008 2009 2010

1 February 2011

8Sales in local currencies (excl. structural changes)

-30-25-20-15-10-505

101520

% change y-o-y

2008 2009 2010

1 February 2011

9Growth in local currency(Organic growth + acquisition/divestments)

-20

-15

-10

-5

0

5

10

15

20

2008 2009 2010

% y-o-y

7.1%-19.0%

14.2%

Organic growth

Acquisitions/Divestments

1 February 2011

10Growth development by geographyLocal currency Q4 2010 vs Q4 2009

Europe+17%

Asia/Pacific +20%

Latin America +16%

Middle East & Africa +8%

North America +17%

1 February 2011

11Growth development by geographyLocal currency 2010 vs 2009

Europe+7%

Asia/Pacific +31%

Latin America +20%

Middle East & Africa +10%

North America +13%

1 February 2011

12Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

19.0 16.3

0.0

0.9

17.2

-6.2

11.0

0.0

0.3

19.3

-3.2

16.1

16.6

0.0

-0.5

16.1

-5.2

10.9

5.3

0.0

-0.3

5.0

-7.7

-2.7

-14.1

0.4

0.3

-13.4

-1.4

-14.8

-24.9

1.2

3.7

-20.0

6.6

-13.4

-30.8

1.1

5.6

-24.1

12.2

-11.9

-26.9

1.4

7.1

-18.4

13.6

-4.8

-13.0

2.4

8.5

-2.1

10.3

8.2

2.7

0.5

6.4

9.6

-0.9

8.7

6.2

1.3

4.0

11.5

-4.1

7.4

4.9

1.0

3.8

9.7

-1.2

8.5

Fullyear

14.1

0.0

0.1

14.2

-5.6

8.6

Percent y-o-y

Volume

Structure

Price / Mix

Sales in local currency

Currency

Net sales

2008 2009 2010

1 February 2011

13Operating profit

0200400600800

1 0001 2001 4001 6001 8002 0002 2002 400SEKm

2008 2009 2010

Restructuring and one-time items

1 February 2011

14Operating margin

%

0

2

4

6

8

10

12

14

16

2008 2009 2010

Restructuring and one-time items

1 February 2011

15Operating margin

0

2

4

6

8

10

12

14

16

2008 2009 2010

%

12.2

5.7

12.7*

8.0*

Restructuring and one-time items

* Excluding restructuring and one-time items

14.2*

13.8

1 February 2011

16Operating margin per division

-12-10

-8-6-4-202468

1012141618

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

IndustrialService

Automotive

%

2008

Excluding one-off items(eg. restructuring, impairments, capital gains)

2009 2010

1 February 2011

17Fourth quarter 2010

SEKm 2010 2009

Net sales 15,409 13,887

Operating margin excl. restructuring, % 14.9 10.1

Cash flow* -5,966 1,445

Cash flow* excl. acquisition of Lincoln Industrial 798

Operating margin, % 14.3 7.2

Operating profit 2,202 1,004

Profit before taxes 2,048 765

Net profit 1,350 505

Basic earnings per share, SEK 2.87 1.05

*after investments before financing

1 February 2011

18Full year 2010

SEKm 2010 2009

Net sales 61,029 56,227

Operating margin excl. restructuring, % 14.2 8.0

Cash flow* -2,838 5,752

Cash flow* excl. acquisition of Lincoln Industrial 3,926

Operating margin, % 13.8 5.7

Operating profit 8,452 3,203

Profit before taxes 7,549 2,297

Net profit 5,296 1,705

Basic earnings per share, SEK 11.28 3.61

*after investments before financing

1 February 2011

19Inventories as % of annual sales

18

19

20

21

22

23

24

25% Long-term target level: 18%

2008 2009 2010

X Excluding acquisitionof Lincoln Industrial

1 February 2011

20Cash flow, after investments before financial items

-6 000-5 500-5 000-4 500-4 000-3 500-3 000-2 500-2 000-1 500-1 000

-5000

5001 0001 5002 0002 500SEKm

Cash out fromacquisitions (SEKm):

2008 1,2842009 2412010 6,799

X Excluding acquisitionof Lincoln Industrial

2008 20102009

1 February 2011

21Return on capital employed

0

5

10

15

20

25

30

2008 2009 2010

ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities.

%

24.0

9.1

24.0

1 February 2011

22Net debt(Short-term financial assets minus loans and post-employment benefits)

AB SKF, dividend paid (SEKm):2008 Q2 2,2772009 Q2 1,5942010 Q2 1,594

Redemption (SEKm):2008 Q2 2,277

-18 000

-16 000

-14 000

-12 000

-10 000

-8 000

-6 000

-4 000

-2 000

0

SEKm

Cash out fromacquisitions (SEKm):

2008 1,2842009 2412010 6,7992008 2009 2010

1 February 2011

23Debt structure

Maturity years, EURm

55

446

530

100100

• Credit facilities:EUR 500 m 2014, whereof EUR 400* m utilizedSEK 3,000 m 2017, unutilized

• No financial covenants nor material adverse change clause

130

400*

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016

130

400*

1 February 2011

24Key focus areas ahead 2010

• Profit and cash flow

• Adjustment of manufacturing output to new demand levels

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

SKF Care and Six Sigma as guiding lights

1 February 2011

25Key focus areas ahead 2010

• Profit and cash flow

• Adjustment of manufacturing output to new demand levels

• Growing segments and geographies

• Strengthening the platform/segment approach

• Competence development

SKF Care and Six Sigma as guiding lights

1 February 2011

26Dividend proposal

AB SKF’s Board proposes the Annual General Meeting

an increase in the dividend of 43%, giving a dividend of SEK 5.00 (3.50) per share

1 February 2011

27December 2010:Outlook for the first quarter 2011

Development compared to the first quarter last yearThe demand for SKF products and services is expected to be significantly higher for the Group, the divisions and for the different geographical areas.

Development compared to the fourth quarter 2010 and adjusted fornormal seasonalityThe demand is expected to be slightly higher for the Group and for the different geographical areas. The Industrial Division and the Service Division are expected to be slightly higher and the Automotive Division higher.

Manufacturing levelThe manufacturing level will be significantly higher year on year and slightly higher compared to the fourth quarter, adjusted for normal seasonality.

1 February 2011

28Volume trends, regions(based on current assumptions and adjusted for seasonality)

Daily volume trends for: Q4 2010 Q1 2011

Total

7%Latin America

27%Asia Pacific

18%North America

46%Europe

Net sales2010

+++

+++

+++

+++

+++

Outlook Q12011 vs 2010

1 February 2011

29Volume trends, divisions(based on current assumptions and adjusted for seasonality)

Daily volume trends for Q1 2011

Net sales2010

Industrial 32%

Service 36%

Automotive 30%

Total +++

+++

+++

+++

Outlook Q12011 vs 2010

1 February 2011

30Sequential volume trend main segments Q1 2011(based on current assumptions)

5%

25%

18%

10%

5%

4%

14%

12%

3%

4%

Energy

Industrial distribution

Industrial OEM, General+Special

Industrial OEM, Heavy + Off-highway

Aerospace

Railway

Cars

Vehicle Service Market

Electrical and two-wheeler

Trucks

Net sales 2010

1 February 2011

31Guidance for the first quarter 2011

• Tax level: around 30%

• Financial net for the first quarter:Around SEK -200 m

• Exchange rates on operating profit versus 2010Q1: SEK -150 mFull year: SEK -900 m

• Additions to PPE: Around SEK 2.3 bn for 2011

Guidance is approximate and based on current assumptions and exchange rates.

1 February 2011

32Long-term financial targets

Targets

Operating margin level 15%Annual sales growth in local currencies 8%ROCE 27%Inventory to sales 18%

1 February 2011

33Main initiatives going forward

• Accelerate profitable growth

• Reduce cost and eliminate waste

• Invest for growth

One SKF and SKF Care as guiding lights

1 February 2011

34Main actions going forward

Accelerate profitable growth

• Continue to strengthen the platform/segment approach

• Increase the development, launch and commercialisation of new offerings (green)

• Value based selling – usingDocumented Solutions Programme

• Strengthen our service business

• Acquisitions to strengthen platform offer

• Develop other brands of the SKF Group

1 February 2011

35Main actions going forward

Reduce cost and eliminate waste

• Build on Manufacturing Excellence into otherareas - Business Excellence

• Increased manufacturing and sourcing inBest Cost Countries

• Reduce product cost through ICR* activities

* ICR means Integrated Cost Reduction

1 February 2011

36Main actions going forward

Invest for growth

• Increase sales and engineering resources

• Additional factories in growth markets

• Additional SKF Solution Factories

• Increase spending in R&D and improve global network- accelerate plans for India and China

1 February 2011

37Key focus areas ahead 2011

• Profit and cash flow- manage currency and material headwinds

• Manufacturing and suppliers to support growth

• Growing segments and geographies

• Initiatives and actions to support long term targets

• Integration of Lincoln Industrial

• Business Excellence and competence development

One SKF and SKF Care as guiding lights

1 February 2011

38Cautionary statement

This presentation contains forward-looking statements that are based on the

current expectations of the management of SKF.

Although management believes that the expectations reflected in such forward-

looking statements are reasonable, no assurance can be given that such

expectations will prove to have been correct. Accordingly, results could differ

materially from those implied in the forward-looking statements as a result of,

among other factors, changes in economic, market and competitive conditions,

changes in the regulatory environment and other government actions, fluctuations

in exchange rates and other factors mentioned in SKF's latest annual report

(available on www.skf.com) under the Administration Report; “Important factors

influencing the financial results", "Financial risks" and "Sensitivity analysis”.

1 February 2011

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